How and why we think about systems change as a climate funder

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Summary

This report aims to explain what Giving Green means by systems change, why we believe it represents the best opportunity for climate donors, and how the design of our research process enables us to assess the impact of systems change interventions. By sharing these reflections, we hope to encourage increased transparency across philanthropy, build shared learning and best practices, encourage donors who may be newer to funding systems work to deepen their commitments, and maximize our collective impact on the climate crisis. 

What do we mean by systems change? We think of systems-change strategies as those that "change the rules of the game." In other words, funding systems change means funding work that ultimately changes incentives and actions beyond the project being funded. Examples include policy advocacy, technology innovation, market shaping, and strategic grassroots efforts to build political will. We observe that there is a spectrum rather than a binary when differentiating systems-change strategies from non-systems-change strategies.

What are important considerations when considering systems change? The impact of a systems change intervention is often difficult to “measure” at its early stages when funding can be most critical and catalytic. Efforts to evaluate early-stage systems change efforts encounter parameters with high uncertainty, factors that are sensitive with respect to timescales, and broad or not well-defined boundary conditions. Given that standard metrics and quantification tools may not lend themselves to these characteristics, we think it is important to develop a research framework that is broad enough to capture systems impacts, general enough to be applied across diverse interventions, and rigorous enough to allow others to critically examine our research and conclusions. Under such a framework, we are confident that systems change interventions are the best bets for maximizing expected impact.

Why do we think it is important that climate philanthropy supports systems change? We believe that solving climate change is fundamentally a systems problem. Philanthropy is uniquely well-positioned to fund systems change as it can take a relatively unconstrained, global, and holistic inventory of progress and dynamically fill gaps left by other sectors. For example, we think that funding systems change work complements the funding available on the voluntary carbon market, which predominantly consists of quantifiable, near-term emissions reduction or avoidance with clear project boundaries. 

What are some key learnings from our experience assessing systems change work? Understanding the factors influencing past systems-change successes in climate, such as solar photovoltaics and the Inflation Reduction Act, has enabled us to better evaluate today’s systems interventions. Key considerations we recommend for funders are (i) embracing uncertainty and considering secondary effects and (ii) contextualizing strategies, initiatives, and projects under a theory of change that demonstrates a path to broader impact.